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| Ministry of Finance strengthen supervision of stock market. Source: Internet |
Prevent the acts of taking advantage of the policy
Facing unfamiliar changes of Vietnam’s stock market at the beginning of 2022, the Ministry of Finance has directed the State Securities Commission of Vietnam to chair and coordinate with related agencies and units to promote strict inspection and supervision for abnormal signs arising in the stock market to detect and handle violations; urgently transfer documents to Police agency to verify, investigate and handle following law for cases of violation.
Recently, market movements showed that the directives of the Ministry of Finance have initially achieved some positive results. However, to help the stock market develop stably and ensure financial safety and security, the Minister of Finance suggested that the units should actively research and propose measures to thoroughly solve the problems, prevent the acts of taking advantage of the policy, and minimize policy loopholes.
Accordingly, regarding the completion of the legal framework, the Ministry of Finance assigned the State Securities Commission to coordinate with the Department of Banking and Financial Institutions, the Legal Department, the Department of Corporate Finance, Department of Accounting and Auditing Regulations and related units to urgently review the overall Law on Securities and guiding documents to propose amendments and supplements to new regulations inappropriate with the development of the market.
It was furthermore limiting the risk of causing insecurity and safety of the market, protecting enterprises and investors. Reviewing regulations on private placement of securities in the Law on Enterprises to propose the Ministry of Planning and Investment to report to competent authorities for amendments and supplements; reviewing and advising on improving conditions for the establishment of financial funds.
Also, the Ministry of Finance requests the units to summarise and submit to the ministry’s leadership before September 30, 2022 to report to the competent authorities for consideration and decision.
Regarding supervision and inspection of listing registration and changing capital structure of enterprises, the Ministry of Finance assigned the State Securities Commission to direct the Vietnam Stock Exchange, Ho Chi Minh Stock Exchange (HoSE), and Hanoi Stock Exchange (HNX) to strengthen supervision of law compliance of listing organizations, trading registration organizations and trading members; strictly appraise the listing registration documents, securities trading registration of enterprises, focus on quality control, ensure the accuracy of the dossiers, especially pay attention to the companies with the phenomenon of increasing quick capital, newly established companies, revenue is not commensurate with the capital scale, do not have a product or clear business orientation…
At the same time, the Department of Accounting and Auditing Regulations was assigned to coordinate with the Inspectorate of the Ministry and relevant authorities inside and outside the Ministry of Finance to develop a plan to comprehensively inspect the operation of accounting and auditing enterprises of organizations providing consulting and listing support services.
Moreover, promptly detecting and resolutely handling organizations and individuals violating professional ethics, depending on the seriousness of violations; take strict and deterrent sanctions such as: withdrawing the practice license, suspending the business… at the same time, urgently transferring the file to the police investigation agency for a case of intentionally violating the law, contributing to creating conditions for some businesses to take advantage of to bypass the management agency to conduct fraud and appropriate investors’ money.
The ministry also assigned the Department of Accounting and Auditing to chair and coordinate with the State Securities Commission in reviewing and reassigning the task of audit firms with the public interest in the direction of specialization, separating the policy-making agency from the supervisory agency in compliance with legal policies.
The State Securities Commission is assigned to chair and coordinate with the Department of Banking and Financial Institutions, the Inspectorate of the ministry, and the General Department of Taxation in researching and proposing solutions to the State Bank to closely monitor the process of raising capital, capital contribution and capital transfer of public companies to ensure this activity takes place seriously, substantively, complying with the provisions of the law.
Furthermore, minimising the situation of the virtual capital increase, money transfer, proceeds from the process of restructuring capital is not used for registration purposes, closely monitor the phenomenon that business owners or controlling shareholders take advantage of their role in running the business to withdraw borrowed money when performing capital contribution obligations.
Pointing out unusual signs
Regarding supervision of activities of market member companies, the Ministry of Finance assigned the State Securities Commission to chair to develop a reporting framework and related criteria. On that basis, it required securities companies to provide sufficient information on the operation situation in recent years, especially focusing on several transactions such as proprietary trading, margin provision, investment brokerage consulting, corporate bond underwriting, as well as the situation of sharp increase in capital in 2021 and the first half of 2022.
Based on the reports of securities companies, State Securities Commission is assigned to chair and coordinate with the Department of Banking and Financial Institutions and relevant units to check and verify the accuracy of the reports, analyse the data that indicates unusual signs (if any) in the activities of securities companies. Considering whether or not some individuals and businesses take advantage of and collude with securities companies to manipulate and make stock prices as well as advise and bend the law on the distribution of price placement corporate bonds to investors who are not professional.
Based on the results of inspection and verification, the State Securities Commission and the Department of Banking and Financial Institutions are suggested to strengthen and closely monitor the activities of market members proactively. At the same time, suggesting supplementing the responsibilities and considering limiting certain services of securities companies to limit the situation of hot growth, promote the market to develop in a sustainable and safe direction.
Regarding stock exchange supervision, the Ministry of Finance assigned the State Securities Commission, Vietnam Stock Exchange, HoSE, and HNX to strengthen supervision of the underlying stock market and the derivatives market; closely monitor securities codes with large liquidity, unusual movements, consecutive increases and decreases, sudden changes in stock values that are not suitable for production and business situations of enterprises; inspect, examine and handle illegal investment funds and inactive funds to withdraw their licenses and handle them following law.
Furthermore, the Securities Depository Center is assigned to research and propose to develop a set of warning criteria as well as strengthen IT system, apply artificial intelligence to actively analyse and give early warning of abnormal activities of trading accounts, groups of statements with signs of association and continuously buying and selling at the same time to create virtual liquidity, pushing prices for profiteering.
At the same time, actively monitor these accounts and urgently report to the State Securities Commission and the Ministry of Finance to coordinate with the State Bank and the Ministry of Public Security to handle them. Furthermore, in case of necessity, State Bank is requested to have measures to monitor cash flow, especially withdrawals and transfers of large amounts.
Moreover, State Securities Commission is also assigned to actively inspect and supervise the issuance of raising capital by public companies listed on the stock exchange and coordinate with the Stock Exchanges further to strengthen the disclosure of information on the mass media to warn investors about abnormal phenomena in the market promptly. The unit should have a mechanism for disclosing information and analyzing the operation and financial situation of enterprises whose securities codes are being traded irregularly or unexpectedly.
The Minister of Finance requested the State Securities Commission, the Vietnam Stock Exchange and its subsidiaries, the Securities Depository Center, the Department of Banking and Financial Institutions and related units to concentrate its resources maximally and deploy synchronous solutions at all stages of management and supervision to ensure that the securities market operates transparently and effectively.